What Tax Related Papers Can You Toss Out?

BOSTON (CBS) – Most of us fall into one of three categories; we keep too much of the paper that comes into our homes or there those that try to throw out everything. And of course those that fall in between.

Let’s talk about what the IRS expects us to keep in our files. According to the IRS, you will want to keep records that support your income and deductions on your tax return.

They should be kept until the period of limitations runs out which is normally three years from when you filed your return. So you need to keep your 2013 tax information at least thru 2017 or longer.

What that also means is until then the IRS can audit your return or assess you an additional tax. Or it can work in your favor too as you can amend your return to claim a credit or a refund.

You will want to keep your tax records for at least 7 years if you filed a claim for a loss from worthless securities or bad debt deduction.

If you filed a fraudulent return, basically if you thought you could pull a fast one on the IRS such as not reporting income or deciding not to file a return for some reason, you will want to keep your tax information indefinitely. There is no limitation on when they can come after you and often times they are very good at catching you. Computers and banks leave a paper trail.

We all are responsible for paying our taxes. Taxes are the price we pay for living in a civilized society. My advice, report all of the income and take every deduction you are entitled to. You will sleep better at night.

A word of advice: When tossing old documents if they have pertinent information like your name, credit card number or Social Security number on them use a shredder or a pair scissors on them before you toss them.